All 23 of the state's urban hospitals holding a federal rural designation also hold a second filing that moves their wage rate somewhere else. Seven of them moved out of state.
Gundersen Lutheran Medical Center sits in La Crosse, on the Mississippi. Medicare classifies it as a rural hospital.
For wage purposes, Medicare pays it as though it were in Rochester, Minnesota — 90 miles away, across the state line, in a labor market anchored by the Mayo Clinic.
The move is worth an estimated $1.6 million to Gundersen this fiscal year, the largest single gain of any hospital in Wisconsin.
It is not alone. Seven Wisconsin hospitals have reclassified their wage index into Minnesota or Illinois labor markets while holding a federal designation as rural providers. Together, those seven collect an estimated $5.2 million in additional Medicare operating payments — the bulk of the roughly $7.2 million that Wisconsin hospitals gain statewide from wage index reclassification.
Twenty-three Wisconsin hospitals are physically located in urban areas but paid by Medicare as rural, under Section 401 of the Benefits Improvement and Protection Act. Nationally, 85 percent of such hospitals also hold a second, separate wage index reclassification through the Medicare Geographic Classification Review Board.
In Wisconsin, the figure is 23 of 23. One hundred percent.
Every urban Wisconsin hospital that took the rural designation also filed to move its wage rate. Not one accepted the tradeoff Congress wrote into the statute.
Congress assumed the provision would police itself, because rural areas have lower wage indexes. A hospital that becomes rural on paper was supposed to accept rural pay rates in exchange for rural benefits.
Unlike Illinois — where the statewide rural wage index actually sits above the Chicago rate, so the designation costs a hospital nothing — Wisconsin's rural floor works the way it was designed to. The statewide rural index is 0.9179. Milwaukee's is 0.9582. Racine's is 0.9842. Eau Claire's is 0.9571. In Wisconsin, going rural is a genuine pay cut.
The MGCRB reclassification is how hospitals avoid paying it. A hospital redesignated as rural can separately petition to have its wage index calculated as though it were located in an entirely different labor market. The two filings are independent. Nothing stops a hospital from holding both.
The result: rural for the benefits, somewhere else entirely for the paycheck.
The two Mayo Clinic Health System hospitals reclassified into Mayo's own home labor markets in Minnesota. Gundersen, an independent La Crosse system, did the same into Rochester.
Along the Illinois border, three Janesville-Beloit hospitals and one Kenosha hospital reclassified south into the Chicago and Elgin markets — the same Illinois labor markets that, as Patient Daily reported, are themselves being paid at a rural floor rate higher than Chicago's actual wage index.
Froedtert Memorial Lutheran Hospital, a 731-bed academic center in Milwaukee, is paid at the Racine-Mount Pleasant rate rather than the Milwaukee rate — worth an estimated $820,857. Ascension Columbia St. Mary's, also in Milwaukee, made the same move for an estimated $273,580. Aurora Medical Center Summit did as well.
Aurora Medical Center Sheboygan County reclassified from Sheboygan into Milwaukee. SSM Health St. Agnes moved from Fond du Lac into Milwaukee. Aspirus Wausau moved from Wausau into Eau Claire.
Mayo Clinic Health System has two Wisconsin hospitals on the list, and they account for an estimated $2.1 million — the largest system-level gain in the state, from just two facilities, both achieved by reclassifying across the border into Minnesota.
The question the data raises is not about them.
It is about whether a program designed to keep a 40-bed hospital open in Price County should be simultaneously available to a 931-bed academic medical center on Milwaukee's east side, and whether a hospital should be able to claim rural status while arranging to be paid at the wage rate of Rochester, Minneapolis or Chicago.
Rural hospital programs draw on finite pools. Residency slots reserved for rural training, 340B discounts, and enhanced reimbursement all compete for fixed dollars.
Nationally, 679 hospitals hold both. In Wisconsin, so does every urban hospital that took the rural designation in the first place.
Patient Daily has requested comment from Aurora Health Care/Advocate Health, Froedtert Health, UW Health, Gundersen Health System, Mayo Clinic Health System, SSM Health, Aspirus Health, Marshfield Clinic Health System, Mercy Health System and Beloit Health System.
